Commission Seeks Feedback On Draft Cartel Leniency And Immunity Policy

The Commerce Commission is consulting on its revised cartel leniency and immunity policy and revised template leniency agreement.

The cartel leniency and immunity policy has been updated to reflect changes to the Commission’s cartel leniency policy resulting from the introduction of the new criminal cartel offence which comes into effect in April 2021.

“As well as bringing in the risk of jail time for cartel conduct, the new law means that cartel participants may apply for immunity from criminal prosecution. Only the Solicitor-General can grant this immunity, following a recommendation from the Commission. We want to provide clarity on our process before the new law comes into effect, and we are especially interested in views from legal practitioners on our proposed revisions to the leniency policy,” said Commerce Commission Chair Anna Rawlings.

The leniency policy outlines the process for the Commission recommending that an individual or firm should be granted criminal immunity by the Solicitor-General.

The Solicitor-General has revised its draft Guidelines on immunity from prosecution for cartel offences, which set out the criteria the Solicitor-General will consider in deciding whether to grant immunity.

The Commission will continue to consider applications for leniency in relation to civil proceedings. It can grant leniency to the first member of a cartel to approach it, provided that individual or firm meets the requirements for leniency. The Commission will not take civil proceedings for cartel conduct against an individual or firm that has been granted leniency if they fully cooperate with the Commission's investigation and proceedings.

A summary of key changes proposed to the Commission’s cartel leniency policy and questions that submitters may want to address can be found on the Commission's website.

Submissions on the draft leniency and immunity policy will close on 10 February 2021. The Commission intends to publish its updated leniency and immunity policy in April 2021, along with updated FAQs and fact sheet. It will hold a seminar on Wednesday 27 January 2021 at its Auckland office to talk through the key changes to the cartel leniency and immunity policy and answer any questions submitters may have. This seminar will also be live streamed.

Background
Cartel conduct
Cartels can lead to consumers, including businesses, paying higher prices or having reduced choice and quality. A cartel is where two or more businesses agree not to compete with each other through conduct including price fixing, dividing up markets, rigging bids, or restricting the output of goods and services.

Criminalisation of cartel conduct
The new law criminalising cartels comes into effect on 8 April 2021. Any cartel entered into after 8 April 2021 will be subject to the new law, including up to seven years’ imprisonment.

If a cartel was entered into before 8 April 2021, conduct after that date will be subject to the criminal legislation.

Cartel Leniency
Leniency is a key tool in detecting and deterring cartels in New Zealand. It is widely used around the world to uncover cartels. Cartels are difficult to detect and can damage the economy by removing the benefits of competition leading to higher prices and less choice for consumers.

To encourage reporting of cartels, leniency is offered to the first member of a cartel who tells the Commission about its operation and provides evidence about the cartel. This destabilises cartels and maximises the opportunities for the Commission to stop the harmful effects from cartels.

The Commission also offers use of an anonymous whistleblower tool.

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